The fear of catching COVID-19 significantly reduced visits to dental clinics during the pandemic’s height. However, with the easing of COVID-19 fears, the demand for professional dental care services and products have bounced back.
Furthermore, the adoption of state-of-the-art technology in dental surgeries and minimally invasive equipment to enhance patients’ convenience and reduce overall treatment time bode well for the industry’s growth. The global dental market is expected to grow at a 7.4% CAGR to $63.93 billion by 2029.
Therefore, we believe the stocks of fundamentally sound dental companies Dentsply Sirona Inc. (XRAY), Patterson Companies, Inc. (PDCO), and Henry Schein, Inc. (HSIC) could be solid additions to one’s portfolio now.
Dentsply Sirona Inc. (XRAY)
York, Pa,-based XRAY designs, manufactures and distributes various dental products and technologies worldwide for the professional dental market. The company operates through Technologies & Equipment (T&E) and Consumables segments. It also offers treatment planning and a clear aligner solution delivered directly to consumers' homes.
In a virtual event held on May 4, 2022, XRAY unveiled DS Core, a cloud-based solution developed in collaboration with Alphabet Inc.’s (GOOGL) Google Cloud Platform. The company has also introduced DS Core Create, a tool for dental practitioners to gain access to high-quality expert designs; DS Core Care, a comprehensive, integrated, and easy-to-understand equipment service and support solution; and Primeprint Solution, a medical-grade 3D printing solution. These solutions and services with high automation, convenience, accuracy, and improved safety should help XRAY transform digital dentistry and gain a broad market reach.
As of March 31, 2022, XRAY had $374 million in cash and cash equivalents. The company’s EPS is expected to grow at 9% per annum over the next five years. Over the past month, the stock has gained 5.4% in price to close yesterday’s trading session at $41.80.
XRAY’s POWR Ratings reflect its solid prospects. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for XRAY’s Growth, Quality, Sentiment, Momentum, and Stability here. XRAY is ranked #31 of 150 stocks in the Medical - Devices & Equipment industry.
Click here to checkout our Healthcare Sector Report for 2022
Patterson Companies, Inc. (PDCO)
PDOC in St. Paul, Minn., distributes and sells dental and animal health products in the U.S., the U.K., and Canada. The company’s products include pharmaceuticals, vaccines, parasiticides, diagnostics, prescription, and non-prescription diets, consumable supplies, equipment, and software. It serves dentists, laboratories, institutions, healthcare professionals, veterinarians, production animal operators, and animal health product retailers.
For its fiscal 2022 third quarter, ended Jan. 29, 2022, PDCO’s net sales increased 2.9% year-over-year to $1.60 billion. The company’s gross profit came in at $336.61 million, indicating a 3.7% year-over-year improvement. As of Jan. 29, 2022, it had $165.04 million in cash and cash equivalents.
Analysts expect the company’s EPS to improve 6.6% year-over-year to $2.25 for its fiscal 2023, ending April 30, 2023. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $6.62 billion consensus revenue estimate for the same fiscal year represents a 2.5% rise from the prior year. Its EPS is expected to grow 7.2% per annum over the next five years. Over the past month, the stock has gained 4.7% in price to close yesterday’s trading session at $31.58.
PDCO’s POWR Ratings reflect this promising outlook. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, and Stability. Click here to see the additional ratings for PDCO’s Quality, Sentiment, and Momentum. PDCO is ranked #10 in the Medical - Devices & Equipment industry.
Henry Schein, Inc. (HSIC)
HSIC provides health care products and services to dental practitioners and laboratories, physician practices, government, institutional health care clinics, and other alternate care clinics worldwide. The Melville, N.Y., company operates through three groups–Dental; Healthcare Distribution; and Technology and Value-Added Services. Its value-added practice solutions include financial services on a non-recourse basis, e-services, practice technology, and network and hardware services.
At the 2022 American Association of Orthodontics’ Annual Session held on May 21, 2022, HSIC’s Henry Schein Orthodontics business featured in-booth demonstrations of its Carriere Motion 3D Class II appliance, Carriere Motion 3D Class III Appliance, and Carriere SLX 3D Self-Ligating Bracket System with M-Series & Expansion Wires and Minimum Touch Orthodontics treatment philosophy. These simple-to-use, minimally invasive appliances that provide enhanced aligner treatment and reduced patient time should help HSIC generate great demand in the coming months.
HSIC’s net sales for its fiscal 2022 first quarter ended March 26, 2022, increased 8.7% year-over-year to $3.18 billion. The company’s gross profit came in at $973 million, up 9.2% from the prior-year period. Its operating income came in at $244 million for the quarter, representing a 6.1% rise from the year-ago period. While its non-GAAP net income increased 1.5% year-over-year to $181 million, its non-GAAP EPS grew 4.8% to $1.30. The company had $126 million in cash and cash equivalents as of March 26, 2022.
The $4.87 consensus EPS estimate for its fiscal 2022 ending Dec. 31, 2022, represents a 7.7% year-over-year improvement. It surpassed the consensus EPS estimates in each of the trailing four quarters. And analysts expect its revenue to grow 5.5% year-over-year to $13.08 billion for the same fiscal year. The company’s EPS is expected to grow at a 7.6% rate per annum over the next five years. Over the past month, the stock has gained 5.6% in price to close yesterday’s session at $84.98.
HSIC’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has a B grade for Value. Click here to see the additional ratings for HSIC (Sentiment, Quality, Momentum, Growth, and Stability). The stock is ranked #7 in the Medical - Devices & Equipment.
XRAY shares fell $0.50 (-1.20%) in premarket trading Friday. Year-to-date, XRAY has declined -24.89%, versus a -12.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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